Arkady's Thoughts

Americans are waking up to some unpleasant news this Saturday morning, we have been downgraded.  Indeed, for the first time since 1917 Standard & Poor's has lowered our credit rating from AAA to AA+ ( full text ).  Their outlook is negative, meaning that we could be lowered to AA if our situation worsens. The reaction on the Internet seems to be one of shock and fear, but neither reactions are appropriate.  Lets first examine some of the key points of the text to find out what S&P lists as their primary reason for this particular action. The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics. ...and... We lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related...

Washington Post has a wonderful interactive webpage that puts you in charge of spending.  We all sit behind our screens and bravely make wild assumptions, opinions and other noise without ever having to perform any difficult decision.  Now is your chance. Below are my choices and my explanations. Some things are easy: Interest payment, social security, medicare,medicaid, military active duty.   Not only are those liabilities that the Treasury owes from previously collected taxes, but interest payment is the one thing that will ensure that no actual default happens.  This is proof positive that the fear mongering performed by Obama and others is just that, fear mongering.  I prefer deceitful lying, but perhaps I tend too be slightly melodramatic. It also shows that the path of entitlement programs are not sustainable.  Monthly payments of 118 Billion on entitlements out of the 172 in revenues is nothing s...

The saga continues as the "deadline" of August 2nd approaches.   You know the crisis is reaching a boiling point when both Obama and Boehner felt the need to interrupt Hell's Kitchen!   We now have had two bills passed by the House, one bill proposed by Boehner, one bill proposed by Reid and something or other proposed from Obama although nobody can explain what it is. So who is looking out for America?   In recent polling there seems to be a growing consensus among people that spending needs to be curtailed - with 55% disapproving a tax hike and Gallup finds a majority opposed to raising the ceiling in the first place!   Pew polling finds similar numbers with people split on whether going past August 2nd! Wow.  So far so good, nice to see fellow Americans not getting snookered by the Teleprompter in Chief or the likes of NPR who are both beating the drums of death in case Congress *gasp* does not allow our greedy Government to borrow mo...

This should be more aptly called "one of many charts" showing our sad trajectory, but it is food for thought anyway.  Note that this is not an exhaustive or comprehensive list as it does not include every American on the dole, but that simply makes the chart this much sadder. Now recognize the impact of the chart in the context of the debt ceiling discussions.  Then ask yourself, what is the point of working your ass off when you are just paying for every soldier, welfare recipient and bureaucrat.   Finally, if the Government was structured like a voluntary business how many of these people contribute to a productive economy.  Mmmkay then.

On the way to work today and on the way back National Public Propaganda Radio was running pieces on the national debt and the debt ceiling.  Not surprisingly the several guests they brought were of the same opinion, any failure to raise the ceiling immediately would result in a catastrophe.  Their explanation was quite simple and partially correct and as usual the devil is in the details and NPR has masterfully ignored them. NPR and the guests they have procured have recited a popular rhetoric.  A default will cause the interests rates to skyrocket and the value of the dollar to plummet causing long term economic damage.  That is correct, provided of course that the US Treasury chooses to not pay the interest on outstanding debt or pay out maturing debt.  Failure to not pay for schools, agricultural subsidies, homeland security, military bases, lavish transportation costs for Congress and even social security/medicare will not in any way impact our...

Rand Paul continues to put money where his mout h is , by planning to release a budget that will slash Federal spending to 18% of the GDP down from an existing 24% that is maintained by the current administration.   To avoid the popular and awfully contentious issues of entitlement effort Paul is achieving his balanced budget by removing entire departments! "Medicaid, children’s health insurance and food stamps are block-granted to the States and capped in the resolution.  Paul eliminates the departments of Commerce, Energy, Education, and Housing and Urban Development, all of which he says are unconstitutional." So while this is exciting and fascinating there is an inherent problem with Paul's proposal.  Even if America is somehow ready to accept that housing, education, commerce and energy are all things that have been made worse by the Federal government and belong to the States how are they going to accept the status quo on a taxation basis? Now in reality the...

In the ongoing circus that has now become Washington DC the likelihood of a shutdown is growing, with two days left for a meaningful decision.   I call it a circus because the idea that some of our smartest Americans cannot decide on whether to cut 61 or 31 or 12 Billion in the face of a 1.5+ Trillion budget deficit is silly. Yet what is being lost in the face of this posturing is whether a shutdown is actually a good idea.  Let me tell you right now, that nobody stands to benefit from a shutdown other than maybe Obama himself.  This is probably why he chose to decline on yet another continuing resolution, my guess is that he studied Clinton's amazing poll numbers after the 1996 shutdown and concluded that it might be a worthy gamble.  He already alienated his base and he has failed to win over anyone on the right, so he is figuring if he makes Boehner out to be Gingrich 2.0 then he stands to benefit.  Right now the public perception is that if the GOP is in f...

The highly anticipated proposal has finally been released and can be found in it's full glory here .  There is quite a bit to go through, but we can focus on the general overview in to retain some modicum of sanity.  There has been quite a bit of buzz about Obama's budget insofar that we will finally get a plan to tackle our debt crisis.  Instead we get a fantasy, pure and simple fantasy.  Obama's disjointed reality has produced a plan that offers a combination of spending reduction - can't call them cuts because they are just reductions of previous plans - tax hikes and the primary ingredient: fantasy. Let us start with what the administration *thinks* will happen. FY 2011 projected revenue: $2.174 Trillion (Arkady: 1.1 Trillion in income) FY 2011 projected spending: $3.819 Trillion (Arkady:  1.682 Trillion on SS/Medicare/Medicaid) FY 2011 projected deficit: $1.645 Trillion Spending as a % of GDP: 25.3% Deficit as a % of GDP: 10.9% FY 2015 projected r...

Earlier this week the House passed a bill that would extend all Bush cuts for those making under 250k and the bill was passed knowingly full well that it would fail in the Senate - it did.  Liberals refuse to extend cuts for the super rich on the count that deficits are crushing this nation. I agree the deficits and the total debt is America's first and foremost issue, but blaming the deficits on tax cuts is less than honest.  There is certainly a correlation, but regardless of what political stripe you are - do you really believe deficits are rise from tax cuts or from spending?   It is illogical to assume that a central authority can spend money that does not belong to them on someone else better than the actual owner of the money.  Illogical.   Still, instead of cutting spending this bill is about fairness and distribution.   AP reports :  ""Do we want to extend those tax breaks for millionaires and billionaires at a time of huge defic...

A short video that you might find interesting.  Tom Coburn delivers a somber speech about the tough choices America has to make in order for our country to hand over a better life to the next generation.  He is unhappy with the current proposal, but believes that despite it's flaws the proposal must move forward.  His primary idea is rooted in the knowledge that so far in America no one has actually proposed a legitimate solution or even the start of a solution to our impending crisis. The crisis as he sees it actually is quite simply the ability to service our debt in the short term future as interest rate payments rise.  He is correct.  At the moment we spend about 200 Billion a year in interest payments alone, with the rate of borrowing happening today and the extremely high probability of bonds selling off the rate payments by 2015 will double or triple.  If the employment situation does not improve and taxation is unable to mop up the deficits then A...

One would expect to find this headline from Onion news, but apparently Obama indeed warns of a double-dip recession due to mounting debt !!  No sh*t Sherlock!   It has now officially become impossible to take our president seriously, he sounds like a child pure and simple.  Obama's policies alone have piled on more debt that Bush ever did and Obama can claim all day that his administration inherited a mess, but anyone with an IQ higher than their shoe size should now realize that our debt problem are due to Obama.  Let's just go from memory to see how our 2009 deficit jumped from 485 billion/year to 1.8 trillion /year - 787 billion dollar stimulus package; we argued against it on the grounds that infusing an economy with more liquidity was not the answer.  We now know the stimulus is riddled with fraud and our economic condition worsened, not improved. - 33 billion  in homebuilder bailouts !!  After the housing bubble do you think...

Headline story , Obama freezes salaries on white house staff that make over 100k. This would include top positions, like chief of staff and press secretary, once said and done this should affect roughly one hundred people. Further he plans to introduce stricter regulations for lobbyists. As a conservative, I find this move to be surprising, unexpected and welcomed. Albeit, there is one very important question that we do not know. How long is this freeze for? One year? Two? Term? Because in order for this to make any real impact, it has to be longer than one yet. Otherwise this is just a distraction gimmick. One of the primary reasons for wanting a small government is that running a big government is expensive and often simply unnecessary . In order for the government to achieve it's desires, it must use manpower to do so and that requires money - namely, your money. Beyond the corruption that occurs with overgrown governments, some of the jobs pay extremely well. Not only are ...